Preparing for the EU Pay Transparency Directive

The EU Pay Transparency Directive represents a significant shift in the European employment landscape. It’s coming into effect in 2026, but it’s important for companies to be prepared in advance. We spoke with Daniel Edenholm, founder of Sysarb to find out what this new directive means for recruitment.

What Is the EU Pay Transparency Directive?

The EU Pay Transparency Directive has been created to decrease the significant gender pay gap. Taking effect by June 5th 2026, it will enforce transparency in how salaries are structured and communicated internally and externally.

Some of the changes that come with the Directive:

• Employers will need to publicly present average pay gaps
• Job ads are required to include salary ranges
• Employers must develop structured salary bands to justify pay levels
• Employers will no longer be allowed to ask candidates about salary history.

What does this mean for recruitment?

The changes coming into place will have a significant impact on the way we hire. Some of the biggest changes employers and hiring teams need to prepare for are:

• Salary transparency begins even earlier: Salary ranges must be structured, justified and clear before publishing roles, as they will need to be visible within the job description.
• More fairness for candidates: Dynamics for salary negotiation will change significantly, as you’ll only be able to ask candidates about their expectations, not what they’ve previously earned.
• A shift in candidate experience: More transparency and honesty from the beginning will allow candidates to better choose roles which align with their expectations.

Developing a job architecture

Daniel explains that the same role can have different levels, meaning you might have different pay ranges for the same role because of the responsibilities.

This is why it’s so important to not just look up the statistics of a job title, but to actually put in the research to develop a structure beforehand. Your team needs to work on the job architecture for different job levels, roles and responsibilities and ensure everyone is on the same page.

Having a solid job architecture in place will be essential for explaining why someone is at a certain salary level, justifying the differences between salaries and setting expectations with candidates and employees from the very beginning.

Will this Directive lead to a bigger cultural shift?

Beyond the policies and the processes, Daniel thinks this directive will likely reshape workplace culture as a whole. Forcing us to talk about salaries can lead to creating transparency in other areas of the business as well. 

Future conversations about pay will be fuelled by data and expectations for fairness and consistency. Employees will have access to more information about their colleague’s pay and transparent, evidence-based conversations.

Key takeaways

Prepare: One of the biggest things you can do to make sure you’re ready for the EU Pay Transparency Directive is to start preparing now if you haven’t already. Don’t wait for the rush of next year and start organizing your architecture.

Over-communicate: Once you have your job architecture and structures sorted, make sure everyone is on the same page. Your candidate experience could be affected by inconsistent messaging from your team.

Educate: Your TA teams and hiring managers will be on the frontlines of answering questions from candidates. Ensure you’ve given them the tools and training they need to support transparent conversations.

To listen to the rest of the episode and learn more on the EU Pay Transparency Directive, check out the episode on your preferred platform below!